Sean G. Livesey Joins High Swartz LLP's Real Estate Practice Group

The firm is pleased to announce the addition of Montgomery County real estate attorney Sean G. Livesey to its Norristown law office.

Sean primarily focuses his practice on real estate matters, civil, and commercial litigation. He also has experience in zoning and land development, municipal code enforcement, real estate sales, and leasing.

Previously, Sean was a partner in his family practice in Conshohocken, PA, where he advised Philadelphia area startup companies regarding property acquisitions, business structure, and real estate tax liability. Sean also consulted with Montgomery County businesses to analyze zoning and land development proposals.

"High Swartz's real estate practice group shares my passion for representing developers and property owners while improving our communities in Greater Philadelphia. Joining Montgomery County's oldest law firm is an honor and I'm excited to contribute."

Prior to his private practice work, Sean was an associate at a large Philadelphia law firm’s commercial group where his practice included business litigation, real estate, zoning and land use. He represented real estate developers in Philadelphia, Montgomery County, Bucks County, and Delaware County. Sean also represented landlords in complex, large-scale landlord/tenant disputes.

As an associate at a large law firm in Virginia in 2018, Sean represented the claims administrator for the NFL Concussion Settlement in negotiating agreements with health systems to incorporate professionals into a diagnosing physicians network. Within the scope of the agreements, former players could be diagnosed with such neurodegenerative diseases as CTE, dementia, ALS, and Parkinson's.

Sean earned his J.D. at the University of Richmond's T.C. Williams School of Law while also obtaining his MBA at Richmond's Robins School of Business. After graduating, he served as a Judicial Intern for the Honorable Thomas N. O'Neill. Jr., United States District Judge for the Eastern District of Pennsylvania.

Sean grew up in Montgomery County, PA and enjoys cheering on Philly sports teams with his German shepherd, Zoe, a rescue from Memphis, TN.

17 High Swartz Attorneys Named Main Line Today Top Lawyers for 2021

We are pleased to announce that 17 attorneys have been included in the 2021 Main Line Today Top Lawyers Around the Main Line and Western Suburbs List.

Main Line Today is a Southeastern Pennsylvania regional magazine focusing on the communities of the western suburbs of Philadelphia and surrounding Counties. The Best Lawyers of Chester County, Delaware County and Montgomery County are nominated through peer balloting then vetted through Main Line Today's editorial process.

2021 sees the addition of 3 High Swartz attorneys to the Top Lawyers list. New attorneys include family lawyers Chelsey A. Christiansen and Michael B. Prasad for Divorce and Family Law and Stephen M. Zaffuto for Real Estate Law. Congratulations to all winners!

Below is the full list of High Swartz Top Lawyers from Main Line Today in 2021.

  • Joel D. Rosen - Business Law
  • Kevin Cornish - Civil Litigation
  • Mark Fischer - Civil Litigation
  • Melissa Boyd - Divorce & Family
  • Mary Doherty - Divorce & Family
  • Elizabeth Early - Divorce & Family
  • Chelsey Christiansen - Divorce & Family
  • Michael Prasad - Divorce & Family
  • Thomas Rees - Employment Law
  • James B. Shrimp - Employment Law
  • David Brooman - Municipal Law
  • Gilbert High - Municipal Law
  • William Kerr - Municipal Law
  • Richard Sokorai - Personal Injury
  • Arn Heller - Real Estate Law
  • Stephen Zaffuto - Real Estate Law
  • Thomas Panzer - Workers’ Compensation

If you're looking for lawyers near you in Norristown, Doylestown, and the Greater Philadelphia area, get in touch with our law office. Our attorneys and lawyers are some of the best you'll find to handle all your legal concerns.

Tenants and Bankruptcy

Few events are more frustrating to a landlord than tenants and bankruptcy. The uncertainty of whether the tenant will pay outstanding rent, compensate for utilities and late fees, and leave the property can be infuriating.

Originally acquired as a source of revenue generation, the property now serves as free housing for a delinquent tenant. Despite the seemingly helpless outcome of a bankruptcy filing, a landlord should know there are still options on regaining possession of his property, as well as receiving some payments, even when a tenant declares bankruptcy.

What Happens When a Tenant Declares Bankruptcy?

The bankruptcy begins when the tenant files a Petition in the Bankruptcy Court. Upon the filing of a Petition, any legal proceeding between the landlord and tenant immediately freezes. This abrupt halting of the landlord-tenant dispute, known as the automatic stay, remains in place until either the bankruptcy court permits for it to resume or the bankruptcy proceeding completes.

Even if the landlord has already won a lawsuit, obtained a judgment for possession to reclaim his property, and has coordinated with a local constable to evict a tenant, the automatic stay proibits any further action. The tenant gets to stay until one of the two conditions above occurs.

While the automatic stay remains in place, the landlord should consider his options in conjunction with a real estate attorney. The petition will specify what type, or Chapter, of bankruptcy the tenant has filed. A landlord's options depend on the type of bankruptcy the tenant has filed. In nearly all cases, a residential tenant will file in either Chapter 7 or Chapter 13 bankruptcy.

Tenants and Bankruptcy: Chapter 7

In Chapter 7 bankruptcy, the tenant surrenders his assets to a trustee. The trustee determines which of the tenant's creditors gets paid from those tenant's assets. The trustee generally liquidates the assets and ascertains the compensation each creditor receives.

The trustee pays creditors with secured claims with proceeds from collateral and then pays unsecured claims. As obligations to the landlord under a lease are usually unsecured, landlords typically fail to receive any payment of outstanding rent, late fees, or utilities when a tenant enters Chapter 7 bankruptcy.

The landlord may still get paid, however, if the tenant assumes the lease in bankruptcy. Under the Bankruptcy Code, the tenant must, within 60 days of filing his petition in Chapter 7, indicate whether he intends to either assume or reject the lease.

If the tenant agrees to the lease, he must maintain current rent payments and provide adequate assurance that he will pay all outstanding monies to the landlord within a reasonable amount of time. The tenant, in turn, can stay in the property while he pays the landlord under the terms of the lease.
Should the tenant fail to make such payments or provide the needed assurances, the landlord may file a motion with the Bankruptcy Court for relief from the automatic stay. A real estate lawyer can help you determine when, and if, to file a motion.

If the Bankruptcy Court grants the motion, the automatic stay terminates, and the landlord may return to state court to remove the tenant from the property.

If the tenant rejects the lease, he is no longer obligated to perform under its terms, such as paying rent. The landlord may try to obtain relief of the automatic stay from the Bankruptcy Court if the tenant refuses to vacate the property. After filing the petition, the Bankruptcy Code provides that the tenant rejects the lease if he does not assume it within 60 days.

Tenants and Bankruptcy: Chapter 13

With a Chapter 13 Bankruptcy, the tenant-debtor attempts to restructure his debt and pay his creditors based on a payment plan. This payment plan, which the Bankruptcy Court must approve (or confirm), should include the tenant's proposal on paying the landlord any outstanding rent and costs.

Unsecured creditors, like a landlord, may even receive payment. Unlike a Chapter 7 case, the debtor maintains control over his assets instead of having the trustee liquidate them.

In Chapter 13, the tenant has until the time the Bankruptcy Court judge confirms the payment plan, rather than the 60-day deadline in a Chapter 7 proceeding, to either assume or reject the lease. If the tenant drags his feet and fails to meet his lease obligations while the plan confirmation remains pending, the landlord may ask the Court to confirm the plan sooner or seek relief from the automatic stay.

A tenant may propose to pay the landlord only a fraction of the agreed-upon rent spread over a series of several months while maintaining possession of the property. The landlord, however, may seek relief from the automatic stay to re-obtain the property and seek monetary damages in state court. In the event you would like to seek relief, it’s best to consult with a real estate attorney near you.

Tenants and Bankruptcy: Chapter 11

While individual tenants typically enter bankruptcy under Chapter 7 and 13, some may file under Chapter 11. Typically, business entities file under Chapter 11. In Chapter 11, the tenant-debtor will file a restructuring plan and follow the same deadlines to assume or reject the lease as in a Chapter 13 case.

Like Chapters 7 and 13, the tenant's failure to comply with a lease (such as timely paying rent) provides the landlord a basis to seek relief from the automatic stay. Commercial property tenants filing under Chapter 11 have different deadlines to file a plan of reorganization. They also have separate timelines for assuming or rejecting the lease.

Should I form an LLC for an Investment Property

So you want to invest in real estate, possibly buying one or more investment properties, but are not certain if you should buy them in your own name, as husband and wife or through some form of legal entity. The decisions you make now regarding the purchasing of the real estate could save you time and money in the future. That's why is pays to speak with a real estate attorney near you.

Should I buy rental properties in my own name or as a corporation?

There are various forms of entity to choose from, sole proprietorship, general partnership, limited partnership, limited liability company (real estate LLC) or corporation (C-corp or S-corp). Initially, it is best not to own investment real estate in your own name or a general partnership. In both cases, the individual owner and each general partner will be personally liable for debts/liabilities arising out of the real estate holding.

It is also preferable, in Pennsylvania, not to hold title in the name of a corporation as selling it triggers additional tax liability and the need for tax clearance certificates, which can delay closing on the sale.

LP or LLC? Which entity is best to purchase a rental property?

Eliminating individual ownership and general partnership essentially leaves you with either an LLC or a limited partnership. An LLC is cheaper and easier to set up and provides the same level of liability protection as a limited partnership as well as the same pass-through tax benefits to the members of the LLC.

A limited partnership requires the creation of a general partner, typically a corporate entity or limited liability company, which remains liable for the debts and liabilities of the limited partnership. The limited partners are shielded from liability. But that necessitates the creation of a limited partnership and a general partner. A limited liability company does the same work, with half the effort.

A real estate attorney can help you decide which is best for you.

Can I transfer the rental property title to the entity after it’s been purchased?

As a preliminary matter, whatever decision you make regarding the title to the property, make your final decision before buying the property. You don’t want to buy it as an individual and then after acquiring it transfer it to an entity you create. Such a scenario can create a double payment of real estate transfer tax, which can be significant depending on where you live. Thirty-eight states, including Pennsylvania, have taxes that are paid for transferring title to real estate.

In Pennsylvania, if you buy property in your own name (and pay the transfer tax on that acquisition) and then transfer it to a company you set up to hold title to the real estate, you have to pay transfer tax a second time. To avoid that, simply choose a form of ownership and stick to it. Check out our past articles on county-specific real estate transfer tax for Philadelphia and Montgomery County, PA.

In summary, many real estate companies take the form of real estate LLC for the reasons noted above. If you need assistance in forming an LLC for an investment property, talk to one of our real estate attorneys. Our law firm serves Bucks and Montgomery counties. Call today: 610.275.0700.

What Can Landlords Collect During the Eviction Moratorium, and What Can They Obtain After it Expires?

Landlords are eager to collect unpaid rent and repossess their property, but with the CDC’s eviction moratorium in place, what can landlords collect, and when?

In May, Pennsylvania Governor Tom Wolf entered an executive order preventing owners of residential properties from evicting their tenants for the tenants’ failure to timely pay their rent. Though renters were never permitted to permanently withhold rent payments, the executive order also permitted renters to delay making month-to-month payments while they navigated the COVID-19 pandemic. Governor Wolf extended the provisions originally set forth in the executive order through July 10, and again through August 31.

However, landlords in Pennsylvania could not resume eviction efforts even after Governor Wolf’s executive order expired on August 31. On September 4, the Center for Disease Control (CDC) entered its own order under Section 361 of the Public Health Service Act which placed a nationwide eviction moratorium on residential tenants effective when tenants submit to their landlords a document known as a “CDC Declaration.” The CDC’s order, which aims to prevent the further spread of COVID-19, will not expire until December 31, 2020.

With the prohibition on evictions lasting throughout the calendar year, landlords are undoubtedly anxious to reclaim possession of their rental properties. And though previously unable to collect owed money due to the Pennsylvania moratorium eviction, many landlords are eager to reclaim unpaid rent needed to pay the mortgages, taxes, and utilities on those rental properties.

So what is a landlord entitled to recover once the eviction moratorium expires?

Landlords can actually seek out monetary judgments at this time—the CDC’s order prohibits landlords from evicting tenants throughout December 31. Both Governor Wolf’s executive Order and the CDC’s order do not eliminate the tenant’s obligation to pay rent (though the Pennsylvania moratorium eviction permitted tenants to delay payments). That said, landlords can collect any monthly payments the tenant agreed to make in the lease, including all back rents and (if applicable) utilities. The CDC eviction moratorium merely prohibits landlords from repossessing their property.

What happens if the tenant cannot pay rent after the eviction moratorium expires?

If the tenant cannot pay his rent, but is still bound to several months’ of rent payments, a prudent landlord should inquire what payment the tenant can make. Landlords and tenants are always free to renegotiate the terms of the lease. Agreements to stagger payments of outstanding debts, such as a structured payment plan, can be viable alternatives to litigation. If litigation ensues, it's best to talk with a real estate lawyer for advice. And, in some cases, agreeing to release a tenant from part or all his lease obligations can be mutually beneficial: the tenant avoids increasing debt from unpaid rent, and the landlord can re-let his property to paying tenants.

What happens if a landlord and a tenant cannot agree on renegotiation of payment?

Under these circumstances, landlords should begin eviction proceedings and would be wise to see the assistance of a real estate attorney.

Not all situations, however, can be resolved. Again, many landlords have gone several months without receiving rent income, and may have no choice but to move on from tenants incapable of meeting their lease commitments. Under these circumstances, landlords should begin eviction proceedings and would be wise to see the assistance of a landlord-tenant attorney. Again, landlords should be mindful that they cannot evict tenants throughout December 31 if the tenant has submitted a CDC Declaration.

What is needed to start the process of tenant eviction?

The first step in an eviction proceeding is the issuance of a “Notice to Quit” letter. The Notice to Quit acts as a formal notification from the landlord to the tenant indicating the landlord’s intent to remove the tenant from the property.

How many days in advance must a Notice to Quit letter be given before eviction?

If the eviction is based on the tenant’s non-payment of rent, the Notice to Quit letter must give the tenant 10 days notice of the eviction. However, a tenant can waive his right to be served with a Notice to Quit, and such a waiver is often contained within the lease.

Can a landlord change the locks or otherwise engage in “self-help” on a tenant who hasn’t paid rent?

Landlords should also know that they cannot engage in self-help to carry out an eviction. This has been the law before the COVID-19 pandemic began, and will continue whether or not the eviction moratorium extends throughout 2021. In other words, in the absence of a court order, landlords cannot change the locks on their property to coerce delinquent tenants to leave, nor can they hire a locksmith to do so. Rather, if the tenant remains in possession of the property after the period detailed in the Notice to Quit, a landlord must obtain an eviction judgment from the relevant court.

How does a landlord get an eviction judgement in Pennsylvania?

Typically, to get that eviction judgment in Pennsylvania, the landlord must file a Complaint with the Magisterial District Court that lies in the same jurisdiction where the rental property is located. That Complaint should request that the Magisterial District Court Judge enter an order for possession in the landlord’s favor as well as a monetary judgment against the tenant for all back rent and court costs. In addition to possession and back rent, the landlord can also request judgment for any new rent that will become due at the time of the hearing, and if the lease permits it, unpaid utilities and attorneys’ fees.

The Court will then schedule a hearing at some later date, at which time the landlord (or the landlord’s attorney) will argue before a Magisterial District Court Judge as to why he is entitled to the relief demanded in the Complaint.

However, the Magisterial District Court will only hear a case when a landlord demands less than $12,000.00 in damages. In light of the protracted eviction moratorium—which will have lasted over eight months by the time the CDC’s order expires on December 31—it is not uncommon for a landlord to claim substantially more than $12,000.00 in back rent, attorneys’ fees, outstanding utility payments, and other potential damages. In this case, the landlord cannot file a Complaint with the Magisterial District Court and instead must look to the local Court of Common Pleas for relief. Cases heard before the Court of Common Pleas can take several months to litigate—much longer than those matters heard in the Magisterial District Court level. That said, a landlord owed a significant balance but more interested in obtaining possession may take advantage of the expedited litigation provided by the Magisterial District Court and agree to cap monetary damages at $12,000.00.

Can a tenant appeal an eviction?

Even if a judge grants an order for possession and other relief in the landlord’s favor, the landlord must wait 10 days before he can file the order for possession. During this 10 day period, the tenant can appeal the judge’s decision. If 10 days pass with no appeal, the landlord can then file and serve the order for possession, but a sheriff or constable will not initiate the eviction until another 10 days after service of the order for possession has passed. During this period, which can last several weeks, if the tenant can come up with enough money to satisfy the monetary judgment and the landlord’s costs in obtaining the order for possession before the constable or sheriff can initiate the eviction, then the tenant may continue to posses the property. (This benefit to the tenant, known as the right to “pay and stay,” is available only when the tenant faces eviction for non-payment of rent.)

Can a landlord evict a tenant for other reasons during the pandemic?

The above information outlines the landlord’s options due to a tenant’s non-payment of rent. The CDC’s order does not prevent landlords from commencing eviction proceedings for other reasons, such as when a tenant engages in criminal activity, destroys property, or otherwise violates provisions in the lease or building code. Under these circumstances, there may be different notice requirements that the landlord must adhere to prior to evicting, and the timeframes set forth in a Notice to Quit are different than in a non-payment of rent matter.

What, exactly, a landlord may recover depends on what he and the tenant agreed to in the lease. An aggrieved landlord should contact a landlord-tenant attorney to review the lease and get a better understanding of what he is entitled to after the eviction moratorium ends.

High Swartz Merges with the Law Offices of Glen-David Schwarzschild, LLC of New Jersey

We are pleased to announce the firm's merger with the Law Offices of Glen-David Schwarzschild, LLC. Glen is a skilled Real Estate attorney and will continue to practice out of the new High Swartz office in Cherry Hill, New Jersey.

Mr. Schwarzschild has an active general commercial law practice, consisting of both transactional and commercial litigation matters. His practice concentrates in the areas of real estate tax appeals, real estate, land use, small business representation, commercial litigation, commercial transactions, and related matters.

Practicing law since 1985, Glen brings to High Swartz an established real estate tax appeal practice both in New Jersey and Pennsylvania. He has successfully represented local, regional and national corporate property owners and national property tax consulting firms, including Fortune 500 companies, national real estate investment trusts, and regional and national property management companies.

“High Swartz reputation in the legal community and its ability to provide me with resources and support will allow me to grow my law practice, and maintain and develop relationships with my current and prospective clients.”, says Mr. Schwarzschild.

Glen earned a Bachelor of Science degree in Accounting with a minor in Business Administration from the University of Delaware in 1979. He obtained his Juris Doctor from Rutgers-Camden School of Law in 1985. He is admitted to practice in federal and state court in New Jersey and in Pennsylvania, and before the United States Supreme Court. Outside of the office, Mr. Schwarzschild looks forward to mentoring business students at the University of Delaware in the Fall semester.

The merger of Mr. Schwarzschild’s practice allows High Swartz to establish a presence in the state of New Jersey. While a number of attorneys at High Swartz are licensed to practice in the state, this will be its first office outside of southeastern Pennsylvania.

Boundary Disputes in Pennsylvania

Boundary disputes between neighbors and their properties are nothing new, and are probably just about as old as the concept of privately-owned real estate.

Disputes between adjoining property owners regarding the location of their common property line can arise from a multitude of different factual situations. The property descriptions contained in some ancient deeds written by a quill pen and ink might have been ambiguous or contained inconsistent information. Or maybe a survey conducted many years later reveals that one neighbor’s fence (or deck, shed, or other structure) encroaches on the other neighbor’s property.

However they begin, these boundary line disputes can escalate quickly and require contacting a real estate attorney. Both neighbors may have some seemingly legitimate claim to title of the disputed area, and emotions often run high when it comes to the ownership of land that has been in the family for generations or for which significant sums of hard-earned money have been paid.

Sometimes all it takes is a conversation and/or a little research and the dispute resolves itself. Other times resolution will not be possible until you engage a real estate attorney and a court issues an order in an action to quiet title or ejectment.

Depending on the specific factual scenario, different legal principles may come into play, including adverse possession and the consentable line doctrine. Adverse possession and consentable line claims can allow a person who does not have legal title to a piece of land to acquire title through occupation of the land for a period of time. The requirements for claims made under these principles differ from state to state, and each case will require the analysis of a number of specific facts about the current and historical use of the property in dispute.

Adverse Possession

In Pennsylvania, a claim for adverse possession requires a claimant to show that it has occupied the land of another for a period of 21 years (or 10 years in certain, specific circumstances) in a manner that is:

  • Actual;
  • Continuous;
  • Exclusive;
  • Visible;
  • Notorious; and
  • Hostile.

These requirements are legal terms of art with specific legal definitions, and will require an in-depth understanding of the law and application of the facts by a real estate attorney. But importantly, title to the property can transfer to a person who continuously occupies and uses a portion of land in a manner hostile to the ownership of the title owner, and who has met all other requirements, for the required time period.

The Consentable Line Doctrine

The consentable line doctrine can be applied to cases where the existence of a boundary line is established by either recognition and acquiescence or dispute and compromise. It also requires a period of at least 21 years, but has much less stringent requirements than adverse possession. A claim based on acquiescence may only require that:

  1. that each party has claimed the land on their side of the line as their own, and
  2. that they have occupied the land on their side of the line for a continuous period of 21 years.

There are also less stringent requirements regarding the ability to satisfy the requirement of continuous occupation for at least 21 years by adding years that the property was used or occupied by prior owners, called “tacking”. In consentable line doctrine cases, the claimant does not need for the property for which they are asserting a claim to have been included in the property description of the deed by which they obtained title to their property, but need only show that the prior owner claimed the property and that the property is contiguous to the property they received by deed.

Whether you may be interested in assessing your own claim based on adverse possession or the consentable line doctrine, or need to evaluate the strength of a potential claim against you, it is vitally important to fully understand the law and assess the facts. It’s best to consult with a real estate attorney avoid issues.

What To Do If You Have a Boundary Dispute?

In many cases, neighbors will have good (or at least respectful) relationships and be able to work out some sort of private agreement between themselves. This is preferable where possible, since it will save significant amounts of time and money and help maintain the peace in the neighborhood.

Even in these cases, it may make sense to consult a real estate attorney for assistance and counsel in drafting or reviewing any agreement, as legal rights and real estate interests can often be complex and nuanced. It is important that the agreement protects you and your rights and interests now and in the future.

However, as stated above there are many cases in which the value of the property interest in dispute is significant enough or the neighbors involved are not able to come to an agreement on their own and litigation ensues.

It is important to engage experienced real estate attorneys with knowledge of the law and procedures involved to successfully enforce or defend your property rights. Contact us at 610-275-0700 to discuss your specific boundary dispute in Pennsylvania. Our law firm has offices in Norristown and Doylestown.

2021 *Updated* Real Estate Tax Appeal Deadlines in Southeastern Pennsylvania

Tax appeal deadlines are approaching for the filing of tax appeals throughout Pennsylvania. Make sure you know when your appeal must be submitted to be considered for the 2021 tax year.

PA County Important Dates

Montgomery County: The official deadline for filing appeals in Montgomery County is August 1 – since that date falls on a Saturday this year, applicants would be advised to submit their application by July 31.

Chester County and Bucks County: Both use the first business day in August as the deadline, which this year will be August 3.

Delaware County has undergone a countywide reassessment for 2021 (read more about that process here) and will allow appeals to be filed until September 1. This deadline was pushed from the original date of August 10 pursuant to an emergency order of the Delaware County Court of Common Pleas.

Philadelphia County: appeals are due no later than the first Monday in October, which falls on October 5.

Deadlines in most other counties throughout Pennsylvania are between August 1 and October 1.

Property assessments - and the tax bills that are calculated from them - are often very difficult for property owners to interpret and fully understand. Assessments are often some percentage of actual fair market value, and determining your property’s actual fair market value can be a bit complex.

A challenge to your property’s assessment is usually best supported for residential properties by evidence such as an appraisal, recent sales data for comparable properties, or other sources of information and support. Several other factors might be considered for commercial or investment properties, like the cost approach or income approach to valuation, each of which can involve compiling significant amounts of data and applying nuanced analysis and legal arguments. Real estate attorney Bill Kerr addresses the questions some commercial property owners may have here.

Our real estate lawyers have years of experience representing property owners in counties all across the state in appeals on properties ranging from single family homes to high-value commercial properties to multi-million dollar affordable or market rate apartment complexes. In many counties, the reduced assessment our attorneys are able to achieve will remain in place for many years, resulting in savings year after year.

We recommend consulting with a tax assessment attorney to discuss your property’s value and analyze the potential to realize significant tax savings by filing an assessment appeal. Call 610.275.0700 or email wkerr@highswartz.com.

Stormwater Fees in PA - What You Need to Know

Property Owners in PA looking to challenge their stormwater fees need to understand the requirements regarding how they are structured and assessed.

If you’ve read local newspapers or attended local government meetings in Pennsylvania over the past few years, you’re aware of the controversy over stormwater fees. Disgruntled landowners may call the fees “rain taxes,” but these fees are necessary to comply with the Environmental Protection Agency’s unfunded mandates on state and local governments.

What is a stormwater fee?

A stormwater fee is an assessment charged to property owners within a municipality’s service area in order to finance the costs of local stormwater programs. The amount of the fee for each individual property is usually determined based on its total impervious area (all surfaces that do not allow infiltration of water, including building coverage and surfaces made of materials like concrete and asphalt).

Why are stormwater fees imposed?

The short answer is that federal and state law have mandated a decrease in the amount of pollutants in waterways. Stormwater runoff is a major source of pollutants. Major projects will be necessary to reduce stormwater flow and the funds for these projects will come from municipalities. Most municipalities view stormwater fees as a more palatable and fairer alternative than taxation. .

The federal Clean Water Act sets stormwater requirements that the states administer under federal supervision. The Pennsylvania Department of Environmental Protection (DEP) administers stormwater matters under the MS4 (Municipal Separate Storm Sewer System) Program. The MS4 program applies to municipalities (or large institutions like universities and prisons) that have separate systems for sanitary sewer and stormwater management.

As of 2018, all municipalities in the MS4 program must meet specific pollutant load reduction targets by 2023, with penalties for noncompliance. Compliance will require significant improvements in most municipalities, from regular street and drain cleanings to construction of new retention basins and storm pipe infrastructure.

Why is there a stormwater fee and not a tax?

This mandate is not funded by EPA or DEP, so the costs of compliance fall to the local municipalities. Stormwater management fees are the least burdensome way for local governments to pay for compliance. The alternative of tax increases would be unpopular and would impose costs on the population as a whole rather than target those who generate stormwater. And ignoring the requirements would be even more costly, leading to penalties that would increase over time and also would be paid by all taxpayers. Stormwater fees are also fairer than taxes, because tax-exempt entities like government and nonprofit organizations that often generate significant stormwater runoff will pay stormwater fees.

What municipalities are or will be affected by stormwater fees?

Municipalities or large institutions regulated as MS4s, especially in watersheds designated as “impaired,” will be most affected by stormwater fees. MS4s gather stormwater through storm pipes, drains, or swales and discharge stormwater into local streams and rivers without any treatment.

The DEP manages the MS4 Program, issuing permits and ensuring compliance with federal mandates under the Clean Water Act. Specifically, DEP issues NPDES (National Pollution Discharge Elimination System) permits, authorizing MS4s to discharge stormwater into local waterways. To comply with NPDES permits, MS4 communities must develop a Stormwater Management Program (SWMP). Communities that discharge into watersheds classified by DEP as “impaired” must also develop Pollutant Reduction Plans (PRP).

DEP also requires minimum standards for stormwater controls in local ordinances, and has drafted a model ordinance that MS4s will have to implement by September 30, 2022 to remain compliant. There are over 1059 MS4s at the time of publication. Dep provides a list of these regulated MS4s, organized by county, on the its website, along with many other useful resources.

How are stormwater fees determined?

Municipalities can choose from several options to cover the costs of stormwater compliance. Some municipalities will assess fees directly. Others will create municipal authorities or join regional municipal authorities. Since 2013, the Municipality Authorities Act has permitted municipal authorities for stormwater management planning and projects. These municipal authorities have the authority to impose fees at “reasonable and uniform rates.” (See our earlier blog on municipal authorities for more info).

There are many variations in fee structures among municipalities and municipal authorities because fee calculation is left to the individual municipality or authority. Fees will be deemed reasonable if levied on property owners based on some calculation of the property’s potential to generate runoff. Some of the largest fees will come from properties that are exempt from real estate taxation under Pennsylvania law, such as schools, large churches, and authorities that own large tracts of real estate. The budget effect for these exempt entities may be significant.

A municipality or authority can choose from various methods of measurement as a basis for stormwater fees. Possible methods include the Equivalent Residential Unit (ERU) based on the average impervious area of a residential parcel in the community or a tiered system with several subcategories based on impervious area. More complex calculations include “Intensity of Development Factors (IDF)” or “Equivalent Hydraulic Areas (EHA),” that account for and weight both pervious and impervious area, to scientific and highly-tailored methods like the “Residential Equivalent Factor (REF)”. There is no uniform solution for determining stormwater fees, and the proper method will depend on many factors, including the overall land use characteristics, size, resources, and feedback from constituents and stakeholders. The Overview of Municipal Stormwater Fee Programs, published by the Pennsylvania Environmental Council, provides useful explanations of each method.

How do you get help if you have issues related to stormwater fees?

If you represent a municipal client that needs to comply with a current EPA mandate or a municipality wishing to establish a stormwater authority preventatively, before being mandated to do so, High Swartz can help. We provide counsel to help “thread the needle” of compliance, avoidance of large penalties, and limiting exposure to litigation from property owners.

If instead you are a property owner in a municipality that is implementing or planning for a stormwater fee, High Swartz can help ensure that the fees are based on accurate information, and levied in a “reasonable and uniform” manner, as required by law.

Our experienced municipal government team at High Swartz has in-depth knowledge and experience in all aspects of stormwater management and municipal law and can aid you in navigating this complex area of law and asserting and protecting your interests. Call us at 610-275-0700 or use the contact form found on this page.

PA Commercial Property Owners: Should You Consider Appealing Your Property Tax Assessments During the Coronavirus Pandemic?

May 2020 marks the second month where lost business revenues, unpaid rent and tenant expense reimbursement could have a significant impact on landlords and owners of commercial and residential income producing properties. What can be done?

With the near universal loss of business revenue during the coronavirus pandemic, everyone is being affected. Lawmakers have enacted The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) preventing evictions, mortgage foreclosures, and related legal remedies typically invoked for the failure to meet real estate based contractual obligations. News outlets report numerous instances where tenants or tenant advocacy groups are pursuing lease concessions, rent reductions, lease modifications, and other similar approaches to addressing tenant concerns during the coronavirus displacements.

Where PA property renters are being aided by legislation preventing evictions and foreclosures, the Covid situation can significantly hinder landlords and property owners ability to collect rents and reimbursements. Income producing properties, such as retail shopping malls and centers, office buildings, apartment complexes, hotels, restaurants, and similar other properties which derive revenue from the use of real estate, have been particularly impacted. While the resultant impacts to real estate derived revenues are hopefully temporary, they all create the potential for very significant near term impacts to real estate owners and managers in the form of disrupted operations, lost revenues and the reduction in real estate values.

The loss of tenant revenues impacts the ability of ownership to pay their own real estate related expenses. Real estate taxes are typically a significant expense line item for income producing properties, typically exceeding ten or more percent of gross rental revenues. Where rent and related revenues are significantly impacted, owners, landlords and managers should consider strategies to reduce real estate tax expenses in the effort to weather the COVID 19 storm.

Commercial property owners should consider a 2021 property tax appeal to reduce property expenses.

Real estate tax assessments in Pennsylvania are directly based on property values. County assessment offices will be re-certifying real estate tax assessments for tax year 2021 over the next few months. Property owners who believe their property may be impacted by the Covid crisis such that the current assessment overstates the actual fair market value of the property should consider filing an appeal for 2021.as part of the2021 re-certification process. Most Pennsylvania counties have appeal deadlines for 2021 of between late July and September 1. If you do not file a 2021 appeal by the upcoming deadline, your right to challenge the assessment for 2021 is permanently lost. For important dates regarding appeals in Delaware County PA, see our breakdown.

In conclusion, if you are the owner, landlord, or property manager of a retail, hotel, office, apartment, or similar income producing property, and you have experienced or expect to experience a significant loss in rental and related revenues generated at or by your property as a result of the coronavirus pandemic, you should consider filing a real estate assessment appeal for Tax Year 2021.

If you would like to discuss whether your property is a candidate for a real estate assessment appeal as a result of the coronavirus situation, please contact William F. Kerr, Jr. at wkerr@highswartz.com. High Swartz’s Real Estate attorneys have significant experience assuring that our client’s properties are properly assessed and taxed in dozens of Pennsylvania counties, including Philadelphia.